Almost two years to the day following the decision of the Court
of Justice of the European Union ("CJEU") in Schrems v
Data Protection Commissioner ("Schrems I"), the issue of
transatlantic data transfers is heading back to the CJEU.

The referral from the Commercial Division of the High Court of
Ireland (the "Commercial Court") to the CJEU on the
standard contractual clauses ("SCCs") has been widely
expected. Much will turn, however, on the precise formulation of
the questions to the CJEU, in respect of which further submissions
and hearings are scheduled for 11 October 2017.

While this latest chapter ("Schrems II") in the
ongoing data privacy saga involving the Irish Data Protection
Commissioner (the "DPC"), Max Schrems and Facebook, is
ostensibly concerned with transfers to the United States, the final
CJEU decision on the matter could have wider implications for
transfers to other countries outside the European Economic Area,
including, in a post-Brexit world, the United Kingdom.

Background

In Schrems I, the CJEU decision invalidated personal data
transfers between the EU and the United States based on the EU-US
Safe Harbour regime. This time around, the issues centre on
the validity of the European Commission (the
"Commission") approved, and widely used, SCCs as a legal
basis for transfers of personal data to the United
States.

In Schrems II, the Commercial Court decided on 3 October 2017 to
refer the question of the validity of the SCCs to the
CJEU.

The importance of the case, and of the ultimate decision of the
CJEU on the issues raised, is reflected not only in the length of
the arguments before the High Court (where the hearings lasted
some five and a half weeks), but also in the number and
identity of the parties which filed amicus curiae (or "friends
of the Court") arguments before the Commercial Court,
including the US Government and the Business Software
Association.

Decision

The Commercial Court rightly described the case as an unusual
one. The Commercial Court was not asked to consider the
validity of the SCCs themselves (a right the CJEU reserved to
itself in Schrems I), the validity of Facebook's specific
transfers based on SCCs, nor even to consider the scope and
validity of the DPC's investigation into Facebook's
transatlantic data transfers and her draft findings. The key
questions with which the Commercial Court was tasked were its own
jurisdiction to refer the issue to the CJEU, and having met that
hurdle, whether the concerns identified by the DPC with regard to
the validity of the SCCs were genuine and well-founded and thereby
justified an exercise by the Commercial Court of that
jurisdiction.

In considering the issues, the Commercial Court expressly took
into account all arguments made before it, including those centred
on changes to the data protection landscape following the DPC's
investigation (such as the EU-US Privacy Shield (the "Privacy
Shield"), which replaced the Safe Harbour), and did not
confine itself to the matters addressed by the DPC in her draft
findings. Importantly, the Commercial Court distinguished the
Privacy Shield, holding that the protections and advancements
implemented under the Privacy Shield did not constitute an adequacy
decision in relation to the United States per se, and only applied
in respect of transfers made pursuant to the detailed Privacy
Shield rules.

Thus, some of the concerns raised by the DPC in connection with
the SCCs were the very ones which the Privacy Shield had remedied
when replacing Safe Harbour following Schrems I. Those
concerns included the "well founded concern" of a
potential absence of effective remedies for EU citizens where their
personal data is accessed and processed by US state agencies for
national security purposes.

Given the decision in Schrems I, having concluded that the
DPC's concerns were well founded, the Commercial Court was duty
bound to refer the matter to the CJEU for a preliminary
ruling. While the Commercial Court indicated that that
referral would centre on the validity of the SCCs, somewhat
unusually, it deferred formulating the precise questions to be
referred pending further submissions from all parties, at their
unanimous earlier request to be heard on the scope of the referred
questions. That said, the executive summary of the Commercial
Court judgment indicates that those questions may well include
requesting preliminary rulings from the CJEU on whether the
introduction of the Privacy Shield Ombudsman and / or the existence
of a discretionary power of Member State supervisory authorities
(which might not be uniformly applied throughout the EU) to suspend
transfers, might be sufficient to save the SCCs.

Comment

It is hoped that the scope of the questions posed to the CJEU
will be sufficiently precise as to give a greater degree of
certainty in relation to the circumstances in which the SCCs might
be reliably used for transatlantic transfers, and / or guidance as
to how that certainty might be achieved (for example, whether a
further extension of some of the Privacy Shield protections would
suffice). In a post-GDPR environment, in which the
Commission expressly allowed for the continuation of SCCs, but in
which the potential sanctions for getting this wrong are
exponentially higher, greater certainty will be necessary if
business critical transatlantic data flows are to continue.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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